The secret’s out: one of the simplest ways to save on your monthly budget is to shave your home loan interest rate by refinancing, and moving your loan to another lender.
But before you start hunting down the best home loan deals, make sure now’s really the right time to refinance – and that you’re doing it for the right reasons. Take our quick quiz to check your best next step.
1. Do you have more than 20% equity in your home and is your income likely to stay the same (or rise)?
The more equity you have, the more your loan to value ratio (LVR) may have improved. LVR is the amount of your loan, as a percentage against the value of your property, and as it goes down your chance of a better rate goes up.
Not sure how to work out your equity?
Subtract the amount you owe on your home loan from your current estimated property value, and then divide it by your property value. Multiply the answer by 100 to get the percentage.
For example, if you owe $500,000 on your home loan but your property is now worth around $750,000, your equity is (750-500)/750 X100 =33.3%.
2. Are you currently on a variable rate loan, or at the end of your fixed loan period?
Breaking a fixed rate loan can incur fees – it may be better to wait.
3. Are you able to keep making your current monthly home loan payment?
If you refinance to get a lower monthly repayment, but keep paying more, you could pay your home loan off much sooner.
4. Are you keen to achieve your savings goals? By putting the money you save from a lower interest rate into an offset account, you’ll get closer to that family holiday, major renovation or school fee fund or paying off your loan sooner.
Some lenders offer multiple offset account, making for a flexible and convenient method of managing your money and savings.
5. Are you happy to move all your accounts to one bank?
You’ll typically save more with a combined home loan/account package.
6. Are you paying at least 0.5% more than the best interest rate you’ve seen available?
Every dollar helps, but saving at least 0.5% will probably make it worth your time and any fees involved in the process.
If you answered yes to at least three of these questions, it’s worth comparing rates and talking to a your Geelong Mortgage Adviser specialist. Use our refinancing calculator to work out exactly how much you could save, and then check out our refinancing guide.
Call Geelong Mortgage Adviser today to discuss your options. 0467 198 549